Text/Leju Finance Yang Kaiyue
Haier Zhijia (600690.SH) A-share stock option incentive plan landed, and 46 million shares were granted for the first time.
In response to this equity incentive, Haier Zhijia once said that it will try to drive the incentive object to further promote business synergy and integration, improve operational efficiency, enhance company value and shareholder value, and further attract talents.
The threshold set by this equity incentive is not low. In the first exercise period, Haier Zhijia's net profit attributable to the mother in 2021 needs to increase by more than 30% compared with the adjusted net profit attributable to the mother in 2020.
Looking at the performance of Haier Zhijia in the past three years, the year-on-year growth rate of net profit attributable to the mother has not exceeded 10%. However, since the end of last year, Haier Zhijia completed the privatization transaction of Haier Electrical Appliances, its profitability has increased significantly, and in the first half of the year, its net profit attributable to the mother has increased by more than 16%.
Equity incentives are difficult to exercise
Recently, Haier Zhijia announced that it has completed the registration of the first grant of stock options in the 2021 A-share stock option incentive plan. This time, Haier Zhijia issued A-share ordinary shares to 400 incentive recipients, granting 46 million shares at an exercise price of 25.63 yuan per share.
It is reported that as early as July 30, Haier Zhijia announced the draft of its A-share option incentive plan, which intends to grant 51 million stock options to the incentive object at 25.99 yuan per share, accounting for about 0.543% of the company's shares. Of these, 46 million were awarded for the first time.
According to the draft, the 400 employees targeted by the incentive plan are all core personnel who play an important role in the overall performance and long-term development of Haier Zhijia, including directors, senior managers, general managers of subordinate industries and department managers. Among them, Chairman Liang Haishan, Vice Chairman Xie Juzhi and President Li Huagang intend to be granted 913,900 stock options respectively, accounting for 5.37% of the total.
For the first award, Haier Zhijia also framed a detailed assessment mechanism. The five exercise period assessment conditions are: the first exercise period, Haier Zhijia's net profit attributable to the mother in 2021 increased by more than 30% compared with the adjusted net profit attributable to the mother in 2020; the second exercise period, the net profit attributable to the mother in 2022 increased by more than 15% compared with 2021; the third to fifth exercise period, the net profit attributable to the mother in 2023-2025 was more than 15% higher than the compound growth rate in 2021.
According to this assessment mechanism, it means that the grantee wants to exercise all the rights, and the net profit attributable to the mother of Haier Zhijia in 2021-2025 will reach at least 12.376 billion yuan, 14.232 billion yuan, 16.367 billion yuan, 18.822 billion yuan and 21.645 billion yuan, with a growth rate of 39.42%, 15%, 15%, 15% and 15% respectively.
Compared with the performance of Haier Zhijia in the past 5 years, the net profit attributable to the mother has been growing for 5 consecutive years, and the data shows that from 2016 to 2020, the year-on-year growth rate of the net profit attributable to the mother was 17.15%, 37.01%, 8.34%, 9.66%, and 8.17%, of which the growth rate in 2016 and 2017 exceeded 15%, and then the growth rate was more than 10%.
According to public information disclosure, the top three shareholders of Haier Zhijia are HKSCC NOMIN EES LIMITED (Hong Kong Central Settlement (Agent) Co., Ltd.), Haier Kaos Co., Ltd. and Haier Group Company, holding 23.15%, 13.34% and 11.37% of the shares respectively. The ultimate beneficiary is Chairman Liang Haishan, holding 0.9155% of the shares, and the actual controller has not yet been disclosed.
Profitability is picking up
In recent years, the profitability of Haier Zhijia has been questioned. However, since the end of last year, Haier Zhijia successfully privatized Haier Electric Appliances, and its profitability has increased significantly.
Taking 2020 as an example, Haier Zhijia's revenue was 209.7 billion yuan, higher than Gree's 170.5 billion yuan, and about 80 billion yuan different from Midea's 285.71 billion yuan revenue. However, in the same period, Haier Zhijia's net profit was only 8.877 billion yuan, lower than Gree's 22.18 billion yuan and Midea's 27.22 billion yuan.
Revenue capacity is still relatively strong, and net profit is slightly inferior.
This is related to the fact that it is in the development period of the business. The data shows that in the past three years, Haier Zhijia's sales expense ratio, management expense ratio and financial expense ratio are relatively high. In 2019, Haier Zhijia's sales expenses reached 33.682 billion yuan, and the sales expense ratio was as high as 16.78%, far higher than midea and Gree's 12.39% and 9.13%; in addition, Haier Zhijia's management expense ratio also reached 5.04%, which was also much higher than the other two.
The high rate of sales expenses and management expenses is directly related to the complex structure of Haier Zhijia and Haier Electric Appliances. In the past 20 years, Haier Zhijia and Haier electrical appliances have crossed over a wide range of businesses, but they have their own management teams, resulting in repeated expenditures of sales expenses and management expenses, and low expense rates.
At the end of 2020, Haier Zhijia completed the privatization of Haier Electrical Appliances. As the largest privatization transaction in the Hong Kong home appliance industry, it has received widespread attention from the capital market since the initial stage of its plan. The basic consensus of the outside world on this move is that the fee reduction is effective and long-term positive.
The data shows that after the completion of the privatization, Haier Zhijia's dividend rate is expected to gradually increase from the previous 30% to 40%. In the performance side, it is also evident that in the first half of 2021, the company achieved revenue of 111.619 billion yuan, an increase of 16.60% year-on-year, and a net profit attributable to the mother of 6.852 billion yuan, an increase of 146.41% year-on-year. Haier Zhijia's net profit in the first half of the year has refreshed its highest value in the same period in the past 5 years.
Power high-end home appliances
From the perspective of business structure, at present, Haier Zhijia refrigerator accounts for 32.49% of the total business profit, washing machine accounts for 26.11%, air conditioners account for 13.38%, and kitchen and bathroom appliances account for 16.17% of the total business profit. From the perspective of domestic market share, Haier Zhijia refrigerators have a share of online and offline retail sales in the domestic market of 36% and 39% respectively, and the offline market share of washing machines has reached 40.22%, ranking the leading position in the industry.
However, at the same time, it is difficult to obtain profit growth by significantly increasing its share, so in recent years, Haier has also made efforts to increase the dimension of product unit price.
In 2006, Haier launched the high-end brand Casarte, and after more than ten years of development, in 2020, the Casarte brand ranked first in the retail sales share of refrigerators and washing machines in the high-end market. Despite Casarte's good performance, it has not yet become the "main force" of income. According to the data, the annual revenue of Casarte in 2020 was 8.7 billion yuan, accounting for 4.14% of revenue.
To this end, Haier Zhijia is also making efforts to other high-end home appliances to seek more profit growth points.
On October 23, local time, Haier Zhijia Turkish dryer factory opened and dishwasher factory officially laid the foundation stone. The new clothes dryer plant and the new dishwasher plant will invest more than 85 million euros in total investment, and the annual production capacity is expected to exceed 2.5 million units. Among them, the new clothes dryer plant will invest more than 40 million euros, and the annual production capacity is expected to exceed 1.5 million units; the new dishwasher factory is expected to be completed in June 2022 with an investment of more than 45 million euros and an annual production capacity of 1 million units.